March 2, 2018

Trumpism's enemy is still GOP mainstream, not Never Trump fringe; Way forward is alliance with Bernie

As the partisan reactions to Trump's potential trade war reveal, it is not the Never Trump fringe but the mainstream Republican party that is still the most formidable obstacle to carrying out the agenda that he campaigned on.

The Never Trumpers feel the same way as the mainstream GOP on policy, they just refused to flatter and court Trump the man, or endorse Trump the persona, in order to get out of him what they all want on a policy level -- tax cuts, deregulation, and the rest of the zombie-Reagan agenda.

When it comes to policy that cuts directly against the Reaganite agenda, suddenly we find out that the GOP has not "become Trump's party" as we continuously hear -- not one iota. They all immediately came out to slam the proposed tariffs on steel and aluminum, defending global elite investment and profiteering from cheap off-shored production rather than sticking up for the American working class.

We saw the same thing when Trump had his cabinet officials go out and say "We're not in the business of intervention anymore, so Assad's fate will be left up to the Syrian people". Just a few days later, the Pentagon vetoed that decision and plunged us into an indefinite occupation of yet another country in the Middle East, where we now have thousands of Americans, are amassing a private Kurdish army along the border of Turkey (a powerful nation and NATO ally who we may go to war against because of muh Kurdish freedom fighters), and provide air cover and propaganda for the jihadist militias that we were supposed to get out of bed with. Ditto for trying to get out at long last from Afghanistan.

And we saw the same pattern when the hardliners on immigration tried to use the GOP's unique opportunity to get through a real pro-American program to wind down legal immigration, deport illegals, all while throwing a major bone to the amnesty crowd by legalizing millions of DACA people. The GOP mainstream blocked even this weak solution -- you can imagine how outraged they would have been if the deal had been a moratorium on legal immigration, and amnesty for DACA people tied to deportations of non-DACA illegals.

These observations should temper the dismissive and triumphalist tone toward the Never Trump fringe, as in this column by Scott Greer at Daily Caller. Sure, the Never Trumpers per se have no mass support -- but then neither do most of the mainstream GOP-ers, and yet they're in power, controlling all three elected bodies of government, and running constant interference on the populist-nationalist agenda that won Trump the White House. The donors are the same way -- funding only the failed Reaganite policies that they've been funding for decades.

A party consists entirely in its politicians, its lobbyists, its party apparatus, its donors, and its sectors of society that use it as a vehicle to advance their material interests. Pundits and so-called influencers play little role, and since the Never Trumpers all come from this category, they are indeed ineffectual and irrelevant in the grand scheme of things.

But the fact that the National Association of Manufacturers and the Chamber of Commerce are still major institutional players, sending armies of lobbyists, who will manipulate legions of GOP puppets in government -- that's why the GOP is never going to give up its war on Trump's tariffs, or on his preferred non-interventionist military policy.

As such, there are zero candidates being fielded by the party who support steep tariffs and trade wars, de-scaling our wasteful and failing global military footprint, and sealing the borders and deporting illegals. There will be zero in 2020 as well, other than perhaps Trump himself. There is no way for Trumpian Republican voters to vote for more of what they wanted in his 2016 campaign.

Maybe the party structure will be successful in ending these tariffs early, or killing them before they're even signed (remember, yesterday was only an "announcement" of the president's intentions). Or maybe they'll last through the 2020 election, at which point the GOP as a party will see no more use for Trump and his fellow travelers -- they'll be grateful that they extracted a massive corporate tax cut out of him in 2017, but that's not worth what they would perceive to be an endless trade war that would erode the profit margins of the material sectors of the economy that control the party.

That's when an old-guard giant of the party like Romney -- or, in a pinch, Kasich -- comes along to dethrone Trump during the 2020 primaries. "While we applaud his approach to taxes, sadly these gains will be dashed to pieces by the wrecking ball of a trade war, and no party can allow such a self-inflicted act of destruction." This attempt may be unsuccessful, as it was for Ted Kennedy when he tried to unseat Carter in 1980, but it will be enough to severely wound the incumbent president during his re-election.

This is what happens at the end of a political regime (the disjunctive phase, in Skowronek's model). The would-be reformer from within the party is frustrated by so much institutional inertia, as Carter was in his attempt to undo the New Deal that his Democrat party initiated and had coasted on for decades. True reform will come from the opposition party, a la Reagan taking a sledgehammer to the New Deal for real (the reconstructive phase). The formerly dominant party will now only be able to push back marginally from within the new framework set by the newly dominant party (the preemptive phase, a la Bill Clinton being a slightly less Reaganite follower of Reaganism).

In the present, that means there will be so much institutional obstruction from Trump's own party that he will be largely unsuccessful at carrying out his agenda. Like Carter, who deregulated the transportation sector but not much else, he'll be able to get something done here or there on trade and re-industrialization -- but nothing widespread. And yet even this small amount of decisive breaking with the received wisdom will prove too offensive to the old guard that they will want him ousted. See again all the GOP reactions to just one set of tariffs, from every section of the GOP spectrum (aside from voters, of course, but they do not govern).

Rather, it is the Democrats who are the most happy and supportive of the potential trade war, whether politicians or organizations who belong to the party's coalition (like labor unions). This sets up the Democrats as the successor to the Trump agenda on trade and re-industrialization, obviously under the reconstruction of a Bernie Sanders type leader, not a multicultural Reaganite like Hillary Clinton or Nancy Pelosi (one of the few Dems to vote in favor of NAFTA -- not even Wall Street puppet Chuck Schumer voted for that free trade deal).

The same goes for Trump's plan to disentangle the American military from so many of our occupations all over the world. That gets only minimal GOP support, from libertarians like Rand Paul or Mike Lee, and is much more aligned with the Democrats.

All that remains is taking an entirely class-based approach to restricting immigration and deporting illegals, and the Bernie reconstruction will take over every major element of the Trump campaign. And single-payer healthcare, which Trump has favored for a long time on both moral and cost-efficiency grounds.

Trump supporters who came from a populist-nationalist background should reconcile themselves to these historical patterns of regime change. It will be Bernie-style Democrats who carry out most of the Trump agenda for real. The Republican party will get another chance within those new boundaries as a "slight pushback" party, akin to Eisenhower and Nixon during the New Deal era of Democrat dominance. The Republicans in a Bernie era would be just like him on economics and politics writ large, but differing in some minor way that would let them win a victory in between Bernie and his same-party successors.

It is only on that far longer time-scale that the Republicans will win back power over the government, and rule in a populist-nationalist fashion. First the Bernie-style reconstruction will get three or more terms (as all reconstructive phases get), and then the descendants of Trump will fill in for a few terms.

That's 15-20 years down the road, though. In the meantime, the most important job is to break up the current moribund GOP coalition, and to strengthen the Bernie takeover of the Democrat party. Vote in the Democrats' primaries for populist candidates (there being none on the GOP side), and then in the general election as well.

Trumpian Republicans will never be able to govern on their own terms when the institutional structure forces them to be perpetrators of Reaganism, but only when they are the "slight pushback" party in a regime dominated by Bernie-style Democrats.

8 comments:

"BMO has a good point: tariffs would lead not to higher inflation but crushed margins (inability to pass through higher input costs)"

https://twitter.com/zerohedge/status/969571374879690752

I've been making the point for a couple years, after writing more about Trump themes. But it's easy enough for anyone to figure out once you start thinking about these topics.

We have just been living in such a laissez-faire / profits-over-people kind of world that everyone has forgotten what the alternative is -- not an apocalyptic hyper-inflationary world, but the good old Midcentury world of Leave It to Beaver.

Of course there's one group of people who still know the score -- the elite investing class. They're the ones panicking over the prospect of tariffs and a trade war, because they know damn well they can't pass higher costs of their own onto consumers, due to competition with their rivals on price.

(Or if they can, it's only because of lack of competition, which would only be highlighted in a high-tariff world, and would put them immediately in the cross-hairs of trust busters and angry mobs of consumers.)

Ross & Navarro made the rounds today to show how little the passed-on costs would be to consumers, even if the consumers were to take on all of those higher costs. For a can of Campbell's soup, 6/10 of a penny more in steel costs.

Trivial when you crunch the numbers, and nothing anyone would notice. And something that would be worth us paying in order to keep steelworkers prosperous.

That's a good argument for collective focus rather than individual greed. But I don't think we need to go there on the topic of tariffs -- the more important point we're making is that the economy was made for man, not man for the economy. That takes square aim at the stock owners, their corporate executive boards, and the elite investing class.

Yes, we should think of others and be willing to sacrifice a fraction of a penny to keep them gainfully employed. But the first line of defense of steelworkers is going on the offense against the investing class, and making them -- not the lowly end consumers -- eat any higher costs of production.

Notice the IT co's are not freaking about tariffs and sending panicked PR shills on cable news shows -- they don't manufacture anything, so are insensitive to the changing costs of any industrial commodity like steel or aluminum.

Some more than others -- purely informational co's like Facebook and Netflix will weather the storm perfectly, while those with connections to manufacturing like Apple or Amazon will get hit somewhat.

Those with minimal international operations can't be even potential targets of retaliation -- Netflix, e.g.

Those with maximal intl exposure, like agriculture, will be the only big targets. Sucks to the mega-farmers from the Great Plains, then. No society ever got rich on average from agriculture, only from industrial manufacturing.

Stock performance today shows that -- quite a rally, because these tech stocks are so heavily weighted in the major indexes. NASDAQ sure didn't notice any hardline tariff tweeting from the president.

That points the way toward easing out of the globalist regime -- a truce / alliance with some of the tech giants, and then let the chips fall where they may after that.

In the meantime, team up with them against the Natl Assoc of Manufacturers, Chamber of Commerce, etc., in order to boost industrial commodities (workers *and* owners) and manufacturing workers.

Big banks can invest in, and earn interest on loans to, these tech co's and industrial commodities, after re-allocating them from the hard-hit co's in a protectionist regime.

Not so different from the New Deal alliance between labor-insensitive elite sectors like New York banks, and the mass-based labor unions.

To complete the argument, it's Dems rather than GOP who will form that alliance out of globalism.

The sectors hit hardest by rising costs of materials (or of labor, regarding immigration and minimum wage policies), and that have the most global exposure to retaliation (what we actually export these days) are all Republican.

Thus, the GOP stands most in the way of material progress for middle and working-class Americans. Although they may not like it, the Democrat sector elites do not face annihilation by going along with de-globalization.

Allying with the GOP is self-destructive at this point, and must wait until their sectors are humbled by de-globalization carried out by a new regime of Bernie-style Democrats.

"No society ever got rich on average from agriculture, only from industrial manufacturing."

Hmm.... And which nations were the earliest and quickest to de-industrialize? Britian and the Anglo diaspora, which it just so happens were the earliest winners from the industrial revolution. Back in the Bush/early Obama era, I read about "Anglo disease", which is the post-late 70's rush to gut manufacturing and promote FIRE in the English speaking countries, while also meddling with perhaps not perfect for the Me Gen but still workable/sensible established practices, like the discouragement of abusive lending practices and irresponsible spending with inadequate savings. The recent "recovery" and the PC wave have cause a lot of people to shamefully ignore economic issues and their core status. Some good work was being done in the 2000's/early 2010's, then voila, it got buried under white privilege garbage and neo-Nazi trolling.

The Anglosphere is the most individualistic culture ever produced, for good or for ill. We created much of the moving parts necessary for industry, and initially benefited a lot from that. But after that became the tradition, the establishment, an arrogant generation (or two, or three) came along and attacked "the old ways" as fake, rigid, boring, souless, etc. So let's trash it and start fresh. We're too good to be factory workers. That's for people in crappier countries. Let's give people more advanced, more uh, dignified work in our countries. Haven't you heard? The future's about everyone trying to make a living with their minds, while foreigners at home and abroad use their hands.

Certainly, as best I can tell the Boomers in Russia, Germany, and France didn't wholesale villify industrial society as so irredemably corrupt, such a blight upon the Earth and hopeful young minds that it was worthy of utter rejection by those who could make that choice. English speaking Boomers and Gen X-ers still think that we've made scarcely one iota of progress in saving us from the horror of the smoke stacks. Whereas continental Europeans appreciate the strides we've made in improving 1st world industry.

If co's had the ability to raise prices, they already would have. They don't need permission from anyone, and they don't need to explain their pricing to anyone.

They want to charge consumers the most while giving them the least.

If they will only now raise prices in response to higher costs of production, and not suffer any hit in sales volume due to sticker shock from consumers, then they were leaving all that extra profit on the table to begin with, when their costs were lower, pre-tariff.

They would've jacked those prices up lonnng ago, with or without some generic excuse that "sorry folks, but our costs have gone up".

Because they have not raised prices to the extent imagined, they must not have had that price-raising ability to begin with. And if they don't have that ability, they will not be able to raise prices now either in response to higher costs or anything else.

Economic theory posits that suppliers face rising marginal costs, thus why the supply curve in a supply and demand graph slopes upward. This envisions the supply side of an industry as constituting a number of small to mid-size firms all competing on razor thin margins, where marginal revenue barely exceeds marginal cost. A tariff, so the theory goes, would push marginal costs past marginal revenue, resulting in a significant price increase and thus a loss to consumers.

But as usual, reality is far from economic theory. The empirical studies clearly show that a significant majority of firms have steady or even falling marginal costs (i.e. most industries are, to some degree, economies of scale). They can absorb tariffs with relatively insignificant price increases. As explained above, the hit goes to the bottom line.

The history of industrialization is massive tariffs -- to protect the helpless infant -- followed by steady subsidies -- to nourish the growing child.

If tariffs worked the way the econotards claim they do, no country would have ever industrialized other than the first one, Britain, who would have enjoyed first-in-line advantage, while all other countries would have destroyed themselves through their misplaced tariffs.

Reality is the exact opposite of mainstream econ theory, at the macro level.